In an effort to obtain money from the trader, brokers make the process of the deposit more easy. Logical, because this is their goal. To start earning on the PAMM-accounts the trader only need to open the recurrent account and fund it. 10 minutes, several clicks and you can skim the cream. And only the responsible brokers start talking about the need of verification before trading and need to read the contract. PAMM offer is an offer to the investor from manager, where all the conditions of cooperation are described.
The concept of PAMM accounts introduced in trading practice by one of the major brokers. Copyright use of the name is kept silent, but on its website you can find the full terms and conditions for the creation of the PAMM offer. The manager creates it in electronic form and it contains the parameters that determine the reward. The consent of the investor with the PAMM offer in any case does not impose contractual obligations on any of the parties. The nuances:
a manager can create only one proposal in one PAMM-account;
a basic set of conditions for the creation of the PAMM offer proposed by the broker, the manager adjusts the underlying conditions at its discretion;
offer may be layered (up to 10 levels) depending on the type of traded asset of the manager.
The PAMM offer is the first thing that investor should read before the careful studying of the trading history of the manager and its strategy. Highlights of the PAMM offer, that you should pay attention to:
the minimum deposit for the investor and the deposit amount of a trader. The relation of these parameters will determine the degree of risk because the trader is interested in making his deposit remained intact;
trading period. This is the minimum period of investment in the PAMM account, measured in weeks. Early withdrawal of money is impossible. Regular PAMM-account — account in which all trades are automatically closed at the end of the trading period, the quasi-periodic transactions are transferred to the next trading period;
Percentage of profit (loss), which remains at the trader (manager);
the penalty for early termination. If included, it also provides a penalty;
Theoretically provides the percentage of the investment amount that the trader will indemnify to the investor in case of loss. In fact managers ignore this fact;
the level of reporting. The periodicity of the report of the trader to the investors;
stop out for loss-making capital. If its value is specified, the achievement of all trades are closed, and the money is distributed among investors;
communication with the manager (usually a forum on the broker’s website) and a description of the trading strategy (almost always ignored);
- the protected period.
PAMM offer virtually has no obligation. And even a contract between a trader and a manager also has no obligation, the risks borne by the investor and to recover the money through the courts would be impossible. And yet you should get familiar with the terms of the agreement and the offer, at least to compare managers.